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Hans Vestberg, CEO of Verizon Communications, is a busy man. He’s also a business man. He’s a busy businessman, but has graciously made time to join us for an episode of Extra Crunch Live, our ongoing speaker series for Extra Crunch members. We’re thrilled to have Vestberg as a guest on the show! The episode will air on May 26 at 2pm ET/11am PT. Full disclosure: Verizon is the parent company to TechCrunch, which means that Vestberg is our boss’s boss’s boss’s boss. Vestberg was previously CEO at Ericsson and joined Verizon as chief technology officer and EVP of network and technology in April of 2017. In June of 2018, the company announced that Vestberg would succeed Lowell McAdams as CEO of Verizon Communications. The promotion was made official that August. Vestberg is unlike some of our previous guests on Extra Crunch Live — VCs like Kirsten Green, Roelof Botha and Charles Hudson and entrepreneurs like Mark Cuban. Vestberg is an operator at the helm of one of the world’s biggest corporations, and, as such, provides a unique perspective on adaptation strategies during the coronavirus pandemic. Not only can attendees plan to hear about how Verizon is thinking both short and long-term about the effects of this pandemic on business, but also about how things are changing internally at the company, from re-opening offices to keeping morale high. Vestberg leads a company with thousands of employees and can help founders understand how to manage a company at scale, particularly during a time when decisions are being made quickly and the stakes are high. We’re also interested in talking to Vestberg about the company’s 5G rollout. 5G technology has huge implications for startups, especially as video conferencing and high-bandwidth communication formats become more popular in the midst of physical distancing. Oh, another important thing! We’re not going to be the only ones asking questions. Extra Crunch members can also ask their questions directly in the Zoom call. So make sure you come prepared! If you’re not already a member, you can join Extra Crunch here. Again, this episode of Extra Crunch Live with Hans Vestberg goes down on May 26 at 2pm ET/11am PT. You can find the full details below the jump.

TikTok enlists a big name from Disney as its new CEO, Walmart is shuttering its Jet e-commerce brand and EasyJet admits to a major data breach. Here’s your Daily Crunch for May 19, 2020. 1. Disney streaming exec Kevin Mayer becomes TikTok’s new CEO Mayer’s role involved overseeing Disney’s streaming strategy, including the launch of Disney+ last fall, which has already grown to more than 50 million subscribers. He was also seen as a potential successor to Disney CEO Bob Iger; instead, Disney Parks, Experiences and Products Chairman Bob Chapek was named CEO in a sudden announcement in February. Mayer was likely an attractive choice to lead TikTok not just because of his streaming success, but also because hiring a high-profile American executive could help address politicians’ security concerns about the app’s Chinese ownership. 2. Walmart says it will discontinue Jet, which it acquired for $3B in 2016 Walmart tried to put a positive spin on the news, saying, “Due to continued strength of the Walmart.com brand, the company will discontinue Jet.com. The acquisition of Jet.com nearly four years ago was critical to accelerating our omni strategy.” 3. EasyJet says 9 million travel records taken in data breach EasyJet, the U.K.’s largest airline, said hackers have accessed the travel details of 9 million customers. The budget airline said 2,200 customers also had their credit card details accessed in the data breach, but passport records were not accessed. 4. Where these 6 top VCs are investing in cannabis The results paint a stunning picture of an industry on the verge of breaking away from a market correction. Our six respondents described numerous opportunities for startups and investors, but cautioned that this atmosphere will not last long. (Extra Crunch membership required.) 5. Brex brings on $150M in new cash in case of an ‘extended recession’ Where upstart companies aren’t cutting staff, they are often reducing spend — which is bad news for Brex, since it makes money on purchases made through its startup-tailored corporate card. But co-founder Henrique Dubugras seems largely unbothered on how the pandemic impacts Brex’s future. 6. Popping the hood on Vroom’s IPO filing Yesterday afternoon, Vroom, an online car buying service, filed to go public. What does a private, car-focused e-commerce company worth $1.5 billion look like under the hood? (Extra Crunch membership required.) 7. Experience marketplace Pollen lays off 69 North America staff, furloughs 34 in UK Founded in 2014 and previously called Verve, Pollen operates in the influencer or “word-of-mouth” marketing space. The marketplace lets friends or “members” discover and book travel, events and other experiences — and in turn helps promoters use word-of-mouth recommendations to sell tickets. The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

Kevin Mayer, head of The Walt Disney Company’s direct-to-consumer and international business, is departing to become CEO of TikTok, as well as COO of the popular video app’s parent company ByteDance. Founder Yiming Zhang will continue to serve as ByteDance CEO, while TikTok President Alex Zhu (formerly the co-founder of the predecessor app Musical.ly) becomes ByteDance’s vice president of product and strategy. “I’m thrilled to have the opportunity to join the amazing team at ByteDance,” Mayer said in a statement. “Like everyone else, I’ve been impressed watching the company build something incredibly rare in TikTok – a creative, positive online global community – and I’m excited to help lead the next phase of ByteDance’s journey as the company continues to expand its breadth of products across every region of the world.” The news was first reported by The New York Times and subsequently confirmed in announcements from ByteDance and Disney. Mayer’s role involved overseeing Disney’s streaming strategy, including the launch of Disney+ last fall, which has already grown to more than 50 million subscribers. He was also seen as a potential successor to Disney CEO Bob Iger; instead, Disney Parks, Experiences and Products Chairman Bob Chapek was named CEO in a sudden announcement in February. Mayer was likely an attractive choice to lead TikTok not just because of his streaming success, but also because hiring a high-profile American executive could help address politicians’ security concerns about the app’s Chinese ownership. Over at Disney, Rebecca Campbell (most recently president of Disneyland Resort, who also worked on the Disney+ launch as the company’s president for Europe, Middle East and Africa) is taking over Mayer’s role, while Josh D’Amaro is taking on Chapek’s old job as chairman of Disney parks, experiences and products. In a statement, Chapek said: As we look to grow our direct-to-consumer business and continue to expand into new markets, I can think of no one better suited to lead this effort than Rebecca. She is an exceptionally talented and dedicated leader with a wealth of experience in media, operations and international businesses. She played a critical role in the launch of Disney+ globally while overseeing the EMEA region, and her strong business acumen and creative vision will be invaluable in taking our successful and well-established streaming services into the future.

Looks like things haven’t gone completely smoothly with Quibi‘s launch. The issue appears to have been resolved, but the Quibi customer support account tweeted this afternoon that “some users may be experiencing problems with the Quibi app,” only to add an hour later that “Users should once again be able to use the Quibi app normally. Thank you for your patience.” It’s not clear how widespread the outage was, but according to The Verge, one staffer saw an error screen and was unable to browse the app, while another was unable to create an account. The app seems to be working normally as I write this shortly after 4pm Eastern. If nothing else, it’s a reminder that reliably delivering streaming video is hard, even for a startup that’s raised $1.75 billion. Heck, even Disney experienced widespread streaming issues when it launched Disney+ in November. (It all worked out fine.)

Users should once again be able to use the @Quibi app normally. Thank you for your patience. — Quibi Cares (@quibicares) April 6, 2020

A quick catch-up for those of you still wondering what Quibi even is: It’s a short-form video service founded by Hollywood executive Jeffrey Katzenberg and led by CEO Meg Whitman (previously CEO of Hewlett Packard Enterprise and eBay). The app is launching with nearly 50 shows today, all of them created specifically for mobile, with episodes that are less than 10 minutes long. After a 90-day free trial, it’ll cost you $4.99 with ads or $7.99 per month without ads.

Quibi launches its mobile streaming service in the middle of the quarantine era

The first cannabis startup to raise big money in Silicon Valley is in danger of burning out. TechCrunch has learned that pot delivery middleman Eaze has seen unannounced layoffs, and its depleted cash reserves threaten its ability to make payroll or settle its AWS bill. Eaze was forced to raise a bridge round to keep the lights on as it prepares to attempt a major pivot to “touching the plant” by selling its own marijuana brands through its own depots. TechCrunch spoke with nine sources with knowledge of Eaze’s struggles to piece together this report. If Eaze fails, it could highlight serious growing pains amid the “green rush” of startups into the marijuana business. Eaze, the startup backed by some $166 million in funding that once positioned itself as the “Uber of pot” — a marketplace selling pot and other cannabis products from dispensaries and delivering it to customers — has recently closed a $15 million bridge round, according to multiple sources. The funding was meant to keep the lights on as Eaze struggles to raise its next round of funding amid problems with making decent margins on its current business model, lawsuits, payment processing issues and internal disorganization.

An Eaze spokesperson confirmed that the company is low on cash. Sources tell us that the company, which laid off some 30 people last summer, is preparing another round of cuts in the meantime. The spokesperson refused to discuss personnel issues, but noted that there have been layoffs at many late-stage startups as investors want to see companies cut costs and become more efficient. From what we understand, Eaze is currently trying to raise a $35 million Series D round, according to its pitch deck. The $15 million bridge round came from unnamed current investors. (Previous backers of the company include 500 Startups, DCM Ventures, Slow Ventures, Great Oaks, FJ Labs, the Winklevoss brothers and a number of others.) Originally, Eaze had tried to raise a $50 million Series D, but the investor that was looking at the deal, Athos Capital, is said to have walked away at the eleventh hour. Eaze is going into the fundraising with an enterprise value of $388 million, according to company documents reviewed by TechCrunch. It’s not clear what valuation it’s aiming for in the next round. An Eaze spokesperson declined to discuss fundraising efforts, but told TechCrunch, “The company is going through a very important transition right now, moving to becoming a plant-touching company through acquisitions of former retail partners that will hopefully allow us to more efficiently run the business and continue to provide good service to customers.” Desperate to grow margins The news comes as Eaze is hoping to pull off a “verticalization” pivot, moving beyond online storefront and delivery of third-party products (rolled joints, flower, vaping products and edibles) and into sourcing, branding and dispensing the product directly. Instead of just moving other company’s marijuana brands between third-party dispensaries and customers, it wants to sell its own in-house brands through its own delivery depots to earn a higher margin. With a number of other cannabis companies struggling, the hope is that it will be able to acquire at low prices brands in areas like marijuana flower, pre-rolled joints, vaporizer cartridges or edibles. An Eaze spokesperson confirmed that the company plans to announce the pivot in the coming days, telling TechCrunch that it’s “a pretty significant change from provider of services to operating in that fashion but also operating a depot directly ourselves.”

The startup is already making moves in this direction, and is in the process of acquiring some of the assets of a bankrupt cannabis business out of Canada called Dionymed — which had initially been a partner of Eaze’s, then became a competitor, and then sued it over payment disputes, before finally selling part of its business. These assets are said to include Oakland dispensary Hometown Heart, which it acquired in an all-share transaction (“Eaze effectively bought the lawsuit,” is how one source described the sale). This will become Eaze’s first owned delivery depot. In a recent presentation deck that Eaze has been using when pitching to investors — which has been obtained by TechCrunch — the company describes itself as the largest direct-to-consumer cannabis retailer in California. It has completed more than 5 million deliveries, served 600,000 customers and tallied up an average transaction value of $85.

To date, Eaze has only expanded to one other state beyond California (Oregon). Its aim is to add five more states this year, and another three in 2021. But the company appears to have expected more states to legalize recreational marijuana sooner, which would have provided geographic expansion. Eaze seems to have overextended itself too early in hopes of capturing market share as soon as it became available. An employee at the company tells us that on a good day Eaze can bring in between $800,000 and $1 million in net revenue, which sounds great, except that this is total merchandise value, before any cuts to suppliers and others are made. Eaze makes only a fraction of that amount, one reason why it’s now looking to verticatlize into more of a primary role in the ecosystem. And that’s before considering all of the costs associated with running the business. Eaze is suffering from a problem rampant in the marijuana industry: a lack of working capital. Because banks often won’t issue working capital loans to weed-related business, deliverers like Eaze can experience delays in paying back vendors. Another source says late payments have pushed some brands to stop selling through Eaze.

Another drain on its finances has been its marketing efforts. A source said out-of-home ads (billboards and the like) allegedly were a significant expense at one point. It has to compete with other pot-purchasing options like visiting retail stores in person, using dispensaries’ in-house delivery services or buying via startups like Meadow that act as aggregated online points of sale for multiple dispensaries. Indeed, Eaze claims that its pivot into verticalization will bring it $204 million in revenues on gross transactions of $300 million. It notes in the presentation that it makes $9.04 on an average sale of $85, which will go up to $18.31 if it successfully brings in “private label” products and has more depot control. Selling weed isn’t eazy The poor margins are only one of the problems with Eaze’s current business model, which the company admits in its presentation have led to an inconsistent customer experience and poor customer affinity with its brand — especially in the face of competition from a number of other delivery businesses. Playing on the on-demand, delivery-of-everything theme, it connected with two customer bases. First, existing cannabis consumers already using some form of delivery service for their supply; and a newer, more mainstream audience with disposable income that had become more interested in cannabis-related products but might feel less comfortable walking into a dispensary, or buying from a black market dealer.

It is not the only startup that has been chasing that audience. Other competitors in the wider market for cannabis discovery, distribution and sales include Weedmaps, Puffy, Blackbird, Chill (a brand from Dionymed that it founded after ending its earlier relationship with Eaze), and Meadow, with the wider industry estimated to be worth some $11.9 billion in 2018 and projected to grow to $63 billion by 2025. Eaze was founded on the premise that the gradual decriminalization of pot — first making it legal to buy for medicinal use, and gradually for recreational use — would spread across the U.S. and make the consumption of cannabis-related products much more ubiquitous, presenting a big opportunity for Eaze and other startups like it. It found a willing audience among consumers, but also tech workers in the Bay Area, a tight market for recruitment. “I was excited for the opportunity to join the cannabis industry,” one source said. “It has for the most part gotten a bad rap, and I saw Eaze’s mission as a noble thing, and the team seemed like good people.” Eaze CEO Ro Choy That impression was not to last. The company, this employee was told when joining, had plenty of funding with more on the way. The newer funding never materialized, and as Eaze sought to figure out the best way forward, the company cycled through different ideas and leadership: former Yammer executive Keith McCarty, who co-founded the company with Roie Edery (both are now founders at another cannabis startup, Wayv), left, and the CEO role was given to another ex-Yammer executive, Jim Patterson, who was then replaced by Ro Choy, who is the current CEO. “I personally lost trust in the ability to execute on some of the vision once I got there,” the ex-employee said. “I thought that on one hand a picture was painted that wasn’t the truth. As we got closer and as I’d been there longer and we had issues with funding, the story around why we were having issues kept changing.” Several sources familiar with its business performance and culture referred to Eaze as a “shitshow.” No ‘Push for Kush’ The quick shifts in strategy were a recurring pattern that started well before the company got into tight financial straits. One employee recalled an acquisition Eaze made several years ago of a startup called Push for Pizza. Founded by five young friends in Brooklyn, Push for Pizza had gone viral over a simple concept: you set up your favorite pizza order in the app, and when you want it, you pushed a single button to order it. (Does that sound silly? Don’t forget, this was also the era of Yo, which was either a low point for innovation, or a high point for cynicism when it came to average consumer intelligence… maybe both.)

Eaze’s idea, the employee said, was to take the basics of Push for Pizza and turn it into a weed app, Push for Kush. In it, customers could craft their favorite mix and, at the touch of a button, order it, lowering the procurement barrier even more. The company was very excited about the deal and the prospect of the new app. They planned a big campaign to spread the word, and held an internal event to excite staff about the new app and business line. “They had even made a movie of some kind that they showed us, featuring a caricature of Jim” — the CEO at a the time — “hanging out of the sunroof of a limo.” (We found the opening segment of this video online, and the Twitter and Instagram accounts that had been created for Push for Kush, but no more than that.) Then just one week later, the whole plan was scrapped, and the founders of Push for Pizza fired. “It was just brushed under the carpet,” the former employee said. “No one could get anything out of management about what had happened.”

Something had happened, though: The company had been taking payments by card when it made the acquisition, but the process was never stable and by then it had recently gone back to the cash-only model. Push for Kush by cash was less appealing. “They didn’t think it would work,” the person said, adding that this was the normal course of business at the startup. “Big initiatives would just die in favor of pushing out whatever new thing was on the product team’s radar.” Eaze’s spokesperson confirmed that “we did acquire Push for Pizza . . but ultimately didn’t choose to pursue [launching Push for Kush].” Payments were a recurring issue for the startup. Eaze started out taking payments only in cash — but as the business grew, that became increasingly problematic. The company found itself kicked off the credit card networks and was stuck with a less traceable, more open to error (and theft) cash-only model at a time when one employee estimated it was bringing in between $800,000 and $1 million per day in sales. Eventually, it moved to cards, but not smoothly: Visa specifically did not want Eaze on its platform. Eaze found a workaround, employees say, but it was never above board, which became the subject of the lawsuit between Eaze and Dionymed. Currently the company appears to only take payments via debit cards, ACH transfer and cash, not credit card. Another incident sheds light on how the company viewed and handled security issues. Can Eaze rise from the ashes? At one point, employees allegedly discovered that Eaze was essentially storing all of its customer data — including users’ signatures and other personal information — in an Azure bucket that was not secured, meaning that if anyone was nosing around, it could be easily discovered and exploited. The vulnerability was brought to the company’s attention. It was something that was up to product to fix, but the job was pushed down the list. It ultimately took seven months to patch this up. “I just kept seeing things with all these huge holes in them, just not ready for prime time,” one ex-employee said of the state of products. “No one was listening to engineers, and no one seemed to be looking for viable products.” Eaze’s spokesperson confirms a vulnerability was discovered but claims it was promptly resolved.

Today, the issue is a more pressing financial one: The company is running out of money. Employees have been told the company may not make its next payroll, and AWS will shut down its servers in two days if it doesn’t pay up. Eaze’s spokesperson tried to remain optimistic while admitting the dire situation the company faces. “Eaze is going to continue doing everything we can to support customers and the overall legal cannabis industry. We’re excited about the future and acknowledge the challenges that the entire community is facing.” As medicinal and recreational marijuana access became legal in some states in the latter 2010s, entrepreneurs and investors flocked to the market. They saw an opportunity to capitalize on the end of a major prohibition — a once in a lifetime event. But high government taxes, enduring black markets, intense competition and a lack of financial infrastructure willing to deal with any legal haziness have caused major setbacks. While the pot business might sound chill, operations like Eaze depend on coordinating high-stress logistics with thin margins and little room for error. Plenty of food delivery startups, from Sprig to Munchery, went under after running into similar struggles, and at least banks and payment processors would work with them. With the odds stacked against it, Eaze has a tough road ahead.